How China Avoided Soviet-Style Collapse
November 12, 2021 4:37 AM   Subscribe

Full Article On the Eurasian landmass, this is a reversal of historic proportions. In 1914, the GDP per capita of the Tsarist Empire was approximately three times China’s; by the 1970s, it was six. [...] Forty years later, in terms of purchasing power parity, China has nearly caught up with Russian GDP per capita. [...] Multiplied by its giant population, China’s GDP is now more than nine times larger than Russia’s.
posted by schmudde (25 comments total) 14 users marked this as a favorite
 
Hopefully this isn't a derail, but: I've been on the fence about buying Weber's book, mostly because while the topic is really interesting (Tooze and others have been talking about it on twitter for some time), I'm not sure how hard it is to read--that is, how much background knowledge do you need to have about economics, or recent Chinese history? I'd love it if someone who wasn't, say, an economic historian could say something about the difficulty level of this one.
posted by mittens at 4:44 AM on November 12, 2021 [1 favorite]


Ya, a better title would be “How China avoided American-style financial imperialism”
posted by thedamnbees at 9:15 AM on November 12, 2021 [4 favorites]


Oh and mittens, I haven’t read the book, but here’s the author discussing it.
posted by thedamnbees at 9:20 AM on November 12, 2021 [1 favorite]


How China Avoided Soviet-Style Collapse

They subjected their populace to slave-like conditions for decades, offering them to American manufacturing concerns for peanuts in order to rake in as much hard currency as possible allowing them to buy their way out of any economic quagmire they fucked themselves into.
posted by Your Childhood Pet Rock at 10:02 AM on November 12, 2021 [7 favorites]


Your Childhood Pet Rock: They subjected their populace to slave-like conditions for decades, offering them to American manufacturing concerns for peanuts in order to rake in as much hard currency as possible allowing them to buy their way out of any economic quagmire they fucked themselves into.

Lately I've been idly thinking about the fact that this has been the price of entry into the world of industrial capitalism for almost every nation, going right back to the industrialization of England itself. Sacrifice three or four generations in just the right way to feed the system what it wants, and eventually the system will dole out the machine tools and expertise and financial power you need to become an industrial power.

Germany had to do it under Bismarck, Japan under Meiji, the Soviet Union under Stalin, and China under Deng. (And Canada, you might argue, under the Minister of Everything. I suspect many other nations had their equivalents.) Just hope that you lever what you want out of the system before it eats you up completely.
posted by clawsoon at 5:43 PM on November 12, 2021 [7 favorites]


This bit seems like it kind of smashes up the comparison that's being made:
The Soviet Union and Poland were middle-income countries whose political economy had more in common with inflation-plagued Italy or crisis-ridden Latin America than low-income China. With a per capita income six or seven times China’s, both entrenched interest groups and the population at large had much to lose from any adjustment.
In the 1980s, China was a very poor country without many entrenched interests to block reforms. In this light, it seems that the more relevant comparisons would be between the Soviet Union in the 1920s to 1960s versus China in the 1970s to 2010s: Starting poor, big industrial expansion, all challenges to Party rule crushed.

The more relevant comparison to Russia in the 1980s will probably be China in the 2030s and 2040s, when it's a middle-income country with lots of networks of people who've become powerful as a result of industrialization and who've figured out how to squirrel that power away out of reach of the Party in the way that Soviet industrialists did in the 1980s. China is just now becoming as rich as the Soviet Union was in the 1980s, so I wouldn't expect it to have the problems of the Soviet Union in the 1980s until now or thereabouts.

The apparent conclusion of the article - that Putin and Xi are doing a great job because they're keeping a tight grip - seems a little suspect to me, too.
posted by clawsoon at 8:16 PM on November 12, 2021 [3 favorites]


Clawsoon, the basis for the comparison is that both China and the USSR underwent economic liberalization at around the same time, but had dramatically different outcomes. Comparing a future China to the Soviet Union in the 1980s doesn’t make sense because China has already achieved integration with the global economy, while the Soviet Union in the 80s had not.

The conclusion is hardly an endorsement of authoritarianism:
But it does seem clear that both China’s and Russia’s political leadership have drawn one crucial lesson from the last half century. The key is autonomy. Freedom of action. What is ultimately decisive is the ability to deploy all the tools of power — institutional change, macroeconomic leverage, political suasion and coercion — to manage the dynamic of growth and the risks of insertion in the world economy. That is what both Xi and Putin seem determined to preserve.

I think the point is that, broadly speaking, China succeeded where Russia failed because it was able to maintain national autonomy in the process of liberalization. The analysis here is far too complex to be reduced to a question of whether or not Putin and Xi are doing a great job.
posted by thedamnbees at 4:36 AM on November 13, 2021 [1 favorite]


thedamnbees: the basis for the comparison is that both China and the USSR underwent economic liberalization at around the same time, but had dramatically different outcomes.

"At the same time" in chronological time, yes, but at very different times in terms of economic development. Deng's "black cat, white cat" came at loosely the same level of economic development (and for the same reasons) as Lenin's NEP, and produced similarly high rates of economic growth.

Comparing a future China to the Soviet Union in the 1980s doesn’t make sense because China has already achieved integration with the global economy, while the Soviet Union in the 80s had not.

That's a fair point, and it certainly gives the CCP more economic breathing room. I wouldn't minimize the amount of integration the Soviet Union had with the world economy, though, especially during the 1920s and 1930s when Western companies were deeply involved in Soviet industrialization. (It's interesting to speculate how differently the Soviet Union might have developed if it hadn't had to face WWII.)

I think the point is that, broadly speaking, China succeeded where Russia failed because it was able to maintain national autonomy in the process of liberalization.

Aye, and to me that conclusion obscures the differences in economic starting conditions in Russia and China in the 1980s. "Economic liberalization" is a very different thing in a barely-industrialized economy versus a very-industrialized economy.

Many nations have gotten to the point economically that China is at right now - including Russia in the 1980s - and many nations have gotten stuck at exactly this point, in ye olde middle-income trap. The question of whether China succeeds where Russia failed will really be answered, I think, by whether China is able to escape that trap where other nations haven't.

Not many nations have. This paper [PDF] (from The World Bank Development Research Center of the State Council, the People’s Republic of China) found that only 13 out of 101 were able to make the transition: Equatorial Guinea, Greece, Hong Kong, Ireland, Israel, Japan, Mauritius, Portugal, Puerto Rico, Republic of Korea, Singapore, Spain, and Taiwan. The paper doesn't mention "democracy" once - not surprising, given its source - but when I look at that list I mostly see "already a democracy" or "successfully navigated a difficult transition to democracy" before the trap was escaped, with only one oil-rich exception.
posted by clawsoon at 6:35 AM on November 13, 2021


"Economic liberalization" is a very different thing in a barely-industrialized economy versus a very-industrialized economy.

Sure, I don't think the article obscures those differences though. The whole point is that economic liberalization was indeed very different in Russia and China for many different reasons, and that China fared much better than Russia despite its relative underdevelopment. For example, China managed to avoid the starvation suffered by so many Russians in the process of price liberalization. It did so by implementing the heterodox 'dual-track' system discussed in the article, and it was only able to do so because of the strength and autonomy of the CCP.
posted by thedamnbees at 7:42 AM on November 13, 2021


-How Asia Works
-What Studwell got wrong

also btw...
The New Whole State System: State-led Financialization, State-Private Fusion, and China's Innovation Policies after 2008 - "This article joins ongoing efforts to reconceptualize the role of the state in capitalism through the experiences of China. Using tech companies owned by Tsinghua University as a case study, we offer a novel perspective on China's post-2008 innovation system and the renewed significance of the state in economic restructuring. Drawing on existing research about the history of capitalism and China, we contextualize China's innovation system within its own history of interacting with global capitalism and identify five distinct new features at the conjuncture of post-2008 macroeconomic and geopolitical transformation: mixed-ownership reform, Government Guided Investment Funds, local government financing platforms, transnational investments, and (re)consolidation of party-state leadership."[*]
posted by kliuless at 7:42 AM on November 13, 2021 [1 favorite]


"At the same time" in chronological time, yes, but at very different times in terms of economic development. Deng's "black cat, white cat" came at loosely the same level of economic development (and for the same reasons) as Lenin's NEP, and produced similarly high rates of economic growth.

The paper kliuless linked reinforces the point that China has already broken with western economic orthodoxy and is very much forging its own path. I don't think we should expect it follow in the footsteps of the Soviet Union, and certainly not on the basis of similarities in economic development and growth rates. The OP is largely about how and why China has already taken a fundamentally different path from Russia. I think the rise of China is a world historical event, the consequences of which we cannot yet even imagine, let alone predict on the basis of historical precedents.
posted by thedamnbees at 8:51 AM on November 13, 2021


The short answer is that China remained governed by its Communist Party and Russia did not
posted by moorooka at 12:05 PM on November 13, 2021 [2 favorites]


The slightly longer answer is that Russia’s Communist Party under Gorbachev embraced political liberalism, while China’s did not
posted by moorooka at 12:09 PM on November 13, 2021 [2 favorites]


and that China fared much better than Russia despite its relative underdevelopment.

And I'm arguing that China fared much better - like the Soviet Union under the NEP - because of its underdevelopment. I agree with you that the rise of China is a world historical event, and I agree with you that we don't know what the consequences will be, and that it's dangerous to assume that it will follow the path of any historical precedent. No disagreement on those points, and I'm no expert on this stuff.

I'm arguing that China has not yet faced the challenges that the Soviet Union faced in the 1980s. It's likely that it will have to face those challenges soon, since so many other countries - Western or not, with many different economic and political systems - have faced similar challenges at similar points in their economic development. (Most of them have failed, so far, to overcome the challenges.)

When China partially liberalized in the 1980s, there were no power centers within the country to challenge the Party, no powerful entrenched interests to block its plans. All of the fighting was internal to the Party. Those alternate power centers have been developing as China has industrialized over the past 40 years, as they almost inevitably do as economies get more complex.

If China ends up stagnating, like so many countries have when they've reached China's current middle-income status, then it will face the challenges that the Soviet Union faced in the 1980s. Then it will discover the power of the people who want to stay rich and powerful themselves at the expense of the country as a whole becoming rich and powerful.

I'm arguing that we can't say that China has overcome a challenge it hasn't faced yet. It may face that challenge soon, though, and then we'll see what happens. The Chinese government itself certainly seems to be aware that the challenge is coming.
posted by clawsoon at 12:17 PM on November 13, 2021 [1 favorite]


(I should say "at the expense of becoming rich." No doubt China will be powerful whether it gets rich or not.)
posted by clawsoon at 12:54 PM on November 13, 2021


I'm arguing that China has not yet faced the challenges that the Soviet Union faced in the 1980s.

Ok, but the article is a long and detailed analysis of how China did face many of the same challenges as the Soviet Union and later, Russia.

But, I'm not an expert either. I guess I just found the article more persuasive than you did!
posted by thedamnbees at 1:16 PM on November 13, 2021


But, I'm not an expert either. I guess I just found the article more persuasive than you did!

Or we found different parts of the article persuasive. :-) Looking more closely at the parts that I found convincing, I find myself agreeing with Christopher Miller... possibly because I see from my browsing history that I've been exposed to him before.
posted by clawsoon at 2:01 PM on November 13, 2021


The short answer is that China remained governed by its Communist Party and Russia did not

Not only that but China's Communist Party has the willingness to go after even the most powerful independents and bring them to their knees in the name of social cohesion. The disappearance of Jack Ma just as he started to turn his gaze and influence towards the CCP and his subsequent reemergence have been astounding to watch. Imagine if we took Bezos into a back room, beat him about with a clue-by-four until he agreed to avail himself of his ill-gotten gains, and then broke up Amazon scattering it to the market winds. That's effectively what the CCP did because Ma started talking shit about the party as a capitalist.
posted by Your Childhood Pet Rock at 8:47 PM on November 13, 2021


Soviet Union: an imperialist state with ambitions to gain power and economic might by taking it. Joined Hitler to start WWII, suffered losses but gained territory and colonies and thus power and industry it could control in Eastern and Central Europe. Once those colonies broke free, it exposed the empty vessel left behind. Far behind other industrialized states but still living the myth. It was middle income in name only.
China: did things differently.

There are many reasons why China grew so much versus the Soviet Union (and then Russia). Maybe if the Soviet Union had figured out just the right formula to set pricing on goods it would have made a difference, but I doubt it.
posted by romanb at 11:10 PM on November 13, 2021


There are many reasons why China grew so much versus the Soviet Union (and then Russia).

But did it, though? After 70 years of Communist rule, China now has a per-capita GDP which is similar to the per-capita GDP that the Soviet Union had after 70 years of Communist rule.
posted by clawsoon at 12:33 AM on November 14, 2021




But did it, though? After 70 years of Communist rule, China now has a per-capita GDP which is similar to the per-capita GDP that the Soviet Union had after 70 years of Communist rule.

Absolutely: China has had steady high growth for decades while Russia has stagnated or worse. China has built out entire industrial regions, Russia has not.

Even in terms of per capita GDP, China is on track to surpass Russia. The Soviet Union did all right for itself in terms of GDP but see my previous comment for my unbiased view as to why that occurred. It didn’t hurt that the entire eastern bloc was a captive market for Moscow. You weren’t flying Boeing or tanking up Shell gas in Poland or Ukraine…
posted by romanb at 8:53 AM on November 14, 2021


kliuless: -What if Xi Jinping just isn't that competent?

Interesting article, thanks for the link. I hadn't imagined real estate as an entrenched interests money sinkhole in a Communist nation...
posted by clawsoon at 10:02 AM on November 14, 2021


@Noahpinion: "Real estate -- including construction, finance, and local government -- is the system by which China has redistributed the vast wealth created by its manufacturing success."[1]

Game Over - "The guanxi game has defined China's modern business culture — and no one played it better than Xu Jiayin, the CEO of Evergrande. Now, however, the game seems to have changed on him."[2,3]
posted by kliuless at 11:47 AM on November 14, 2021


I think an important aspect of the potential real estate crisis in China is that the CCP is trying to deflate the bubble without letting it pop. If they succeed, the economy will emerge stronger, and entrenched capitalist interests will be weakened. It’s precisely the kind of large government intervention in the economy that seems impossible in the USA, and is so horrifying to western commentators (and bondholders) like the one linked by kluiless. I hope they succeed, because the alternative would seem to be totally unregulated capitalism all the way to the apocalypse.
posted by thedamnbees at 1:19 PM on November 14, 2021 [1 favorite]


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